Chapter 13 is reorganization or consolidation bankruptcy. In Chapter 13, you make a monthly payment for 3 to 5 years and then you receive the discharge. Chapter 13 is similar to Chapter 11 business bankruptcy, but it’s for individuals or married couples.
Chapter 13 is a bankruptcy option if you don’t qualify for Chapter 7, if you don’t pass the means test, if you own a house with equity or have other prior, current, or future non-exempt assets that would be sold or seized in Chapter 7, or you had a Chapter 7 within the last 8 years.
Chapter 13 permits the debtor time to pay priority taxes or child support arrears; allows people to catch up on mortgages; eliminates unsecured second mortgages; crams down vehicle loans, helps with student loans, helps with taxes, keeps non-exempt assets, bifurcates liens, strips liens, among other benefits.
Being over the median income is not an automatic bar to filing bankruptcy. We have very extensive experience with Chapter 13 above median income debtors compared to other attorneys in Maryland. We are one of the most experienced firms with above median income debtors who file Chapter 13 in the state since significant changes in the Bankruptcy code were enacted in 2005.
Remember that the supposed purpose of the means test was to move consumers into Chapter 13. And most of the Chapter 13 cases we file pay little or nothing to unsecured creditors.
It is not advisable to hire just any lawyer to handle your personal Chapter 13 bankruptcy. Chapter 13 Plans are variable meaning the resulting Plan payment can be very different depending on which lawyer your choose. Chapter 13 Plans involve using knowledge of complex rules to your advantage. The lawyer you hire will represent you against your creditors’ attorneys, including negotiating and litigating the terms of the 13 Plan, including the monthly payment amount. A lawyer with more legal knowledge and research skills will do a better job against your creditor’s attorneys than a mediocre one can, and that affects your bottom line.